Looking Down the Road

Within the past few days, two large car manufacturers have announced significant investments into companies that may, if successful, reduce actual car ownership. General Motors has invested in ridesharing startup Lyft, and Audi has put money into premium car rental service Silvercar.

GM announced that it was putting $500 million into Lyft, valuing the company at $5.5 billion – a significant sum, though only a fraction of rival Uber’s $62.5 billion valuation. Beyond the infusion of capital, GM and Lyft have a number of plans on their roadmap. As The Times notes:

G.M. and Lyft will work on developing an on-demand network of self-driving cars, an area of research that companies like Google, Tesla and Uber have all devoted enormous resources to in recent years. G.M. will also work with Lyft to set up a series of short-term car rental hubs across the United States, places where people who do not own cars can pick up a vehicle and drive for Lyft to earn money.

The Times also tracks the recent partnerships between various automakers and ridesharing services:

In 2011, G.M. teamed up with RelayRides, a car-sharing marketplace, to let G.M. auto owners rent out their idle vehicles.Ford struck a similar deal last year with Getaround, another car-sharing marketplace start-up. And Daimler has been experimenting with Car2Go, a Zipcar-like service that offers SmartCar rentals in urban areas like Brooklyn, Berlin and Toronto.

I should also note that Ford, as I’ve written before, is investing $1.8 billion into research in autonomous driving technology in China.

Moreover, German automaker Audi has announced that it invested $28 million in Silvercar, a premium, convenient car-rental service which currently only boasts Audis.

That manufacturers are investing heavily in various automotive startups speaks to the uncertain nature of the car industry over the next few decades. On the one hand, gas prices are low, and so car sales have remained high, for now. On the other hand, the threat – and beauty – of automotive upstarts like Tesla, and the potential for autonomous vehicles from Google or Apple means that automakers are rightfully hedging their bets. The convergence of mobile technology and, well, mobility, means that consumers will eventually benefit from the smooth interaction between their phones, their homes, and their wheels.

In all likelihood, the combustion engine will continue to be the most popular means of transportation in the coming years. The field of automotive startups is, after all, littered with unfortunate crashes – Fisker and Better Place come to mind – but automakers are wise to be wary of market forces that drive down car ownership:  urbanization, ridesharing, taxi hailing apps, fuel emissions standards, telecommuting, etc.

And so it’s very logical for manufacturers to reinvest profits in everything from ridesharing and car rentals to integration with iOS and Android, and  even – as in Ford’s case – into drones.